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1. INTRODUCTION

Transport is a fundamental sector for and of

the economy, for it embraces a complex network of private and public companies

which provide goods and services to citizens

and businesses in the European Union and its trading partners. It also provides mobility

for Europeans, thus contributing significantly to the free movement of persons within the

Union's internal market.

Efficient transport services and infrastructure

are vital to exploiting the economic strengths of all regions of the European Union and to

supporting the internal market and growth. Thus, they enable economic and social

cohesion. They also matter for trade competitiveness, as the availability, price,

and quality of transport services have strong implications on production processes and the

choice of trading partners. With such a

central role, transport is by definition also inter-related with various other policy areas,

such as environmental and social policies.

The main challenges for the transport sector in the European Union include

creating a well-functioning Single European

Transport Area, connecting Europe with modern, multi-modal and safe transport

infrastructure networks, and shifting towards low-emission mobility, which also involves

reducing other negative externalities of transport. From a social perspective,

affordability, reliability and accessibility of transport are key. Yet, this has not been

achieved across the board. Addressing these

challenges will help in pursuing a sustainable growth in the European Union.

Recently, the Commission has taken several

initiatives to foster the development of the single European transport area, a policy

that it has been pursuing for decades now. Progress towards this goal has been made,

e.g. with:

the 4th Railway Package;

the Blue Belt initiatives for maritime transport;

the proposed Single European Sky II+ package for aviation transport (still

pending); the NAIADES Programme to promote

inland waterways.

The Commission seeks to address

shortcomings, particularly in the market integration of road transport, through a

set of initiatives for a socially fair transition towards clean, competitive and connec-

ted mobility presented in its Low-emissions

Mobility Strategy (adopted in July 2016) and subsequently in its Communication 'Europe

on the Move'1 of 31 May 2017. This Communication accompanies a series of

legislative proposals (so-called 'mobility package') the revision of the rules on access

to the road haulage market, improved social legislation for road transport and a revision

of the road charging rules.

On 8 November 2017, the Commission

adopted a second set of proposals ('second wave of the mobility package').

They respond to the challenge of making mobility clean, competitive and connected

through a combination of demand- and

supply-side measures on low-emission

1 COM(2017) 283.

EUROPEAN SEMESTER THEMATIC FACTSHEET

TRANSPORT

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mobility. These combine an enabling

regulatory framework with action to mobilise financial means, where needed, while

ensuring consumer acceptance and safeguarding the social protection and

employment dimensions.

In concrete terms, the proposals encompass

a number of measures with the aim to enable a transition towards low and zero

emission mobility, such as a reform of the Clean Vehicles Directive or a follow-up to the

Action Plan related to the Alternative Fuels Directive2.

The shift towards low-emission mobility was already an objective in the Transport White

Paper of 2011 and supported by various initiatives. The 2016 Communication 'A

European Strategy for Low-Emission Mobility' highlights the areas on which

Commission initiatives will focus:

digital mobility solutions;

a fair and efficient pricing in transport (which should better reflect negative

externalities of transport); promotion of multi-modality;

an effective framework for low emission alternative energy;

roll-out infrastructure for alternative

fuels; interoperability and standardisation for

electro-mobility; improvements in vehicle testing;

a post-2020 strategy for all means of road transport, supported by research

efforts and investment3.

Additionally, in 2018 a 'Multi-modal Year'

will bring together relevant initiatives and events, including a 'European Single window'

in maritime transport. As part of the second wave of the mobility package, the

Commission is proposing a revision of the Combined Transport Directive4.

More details on the state of play of transport policies can be found in the 2016 White

Paper implementation report5, in the staff working document accompanying the

Communication 'Europe on the Move'6 and in

2 COM(2017) 675. 3 COM(2016) 501. 4 COM(2017) 648. 5 SWD(2016) 226. 6 SWD(2017) 177.

the Implementation report of the EU

maritime transport strategy 2009-20187.

To help EU countries develop the trans-European transport network (TEN-T

network), the European Union adopted a Regulation in 2013 providing Union

guidelines for transport investment (TEN-T

guidelines). The Regulation establishes a legally binding obligation for the EU

countries to develop the so-called 'core' and 'comprehensive' TEN-T networks.

In addition, the Regulation identifies projects

of common interest and specifies the

requirements to be complied with in the implementation of such projects. The

Connecting Europe Facility (CEF) Regulation8, adopted in 2013, allocated a

seven-year budget (2014-2020) of EUR 30.4 billion, of which EUR 24 billion are for the

transport sector.

These examples demonstrate the

considerable opportunities provided by the European transport sector, but also the

challenges it faces, notably in terms of digitalisation, innovation, global leadership

and societal benefits. This is particularly true in the current situation of disruptive

changes in technology (e.g. e-mobility)

and mobility patterns (e.g. the sharing economy) which highlights both the

challenges but also the opportunities discussed in this note.

This note is structured as follows. Section 2

reviews the performance of EU countries in

transport market functioning, in infrastructure quality and in the

environmental impact of transport. Section 3 identifies the policies to address the

challenges and reviews the approach taken at Union level. Section 4 examines the state

of play of existing policies and takes stock of where EU countries stand in implementing

these policies.

7 SWD(2016) 326. 8 Regulation (EU) No 1316/2013 of the European Parliament and of the Council of 11 December 2013 establishing the Connecting

Europe Facility, OJ L 348, 20.12.2013, amended by Regulation 2015/1017 on the European Fund for Strategic Investments, the European

Investment Advisory Hub and the European Investment project Portal, OJ L 169, 25.6.2015.

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2. POLICY CHALLENGES: OVERVIEW OF

PERFORMANCE IN EU COUNTRIES

In the European Union, the transport and storage sector employs around 11 million

persons, accounting for more than 5% of total employment9 and almost 5% of GDP10.

However, the share of women employed in the transport sector is low. According to the

Eurostat Labour Force Survey, in most EU countries, women represent around 20% of

the labour force in the transport sector (2016). Some of the reasons, given by social

partners, why women are underrepresented

in the transport sector include:

a lack of appropriate work-life balance in shift work;

workplace and equipment not being adapted (e.g. lack of sanitary facilities for

women, safety clothing not available in

women sizes); insufficient targeted recruiting of women

in a sector that has the reputation of being dominated by men;

a lack of training and life-long learning opportunities.

The European transport sector provides ample growth opportunities, but

significant challenges remain to fully exploit these opportunities. Given that transport and

logistics represent a sizeable share of company costs and of households'

expenditure, the provision of more efficient transport services and better logistics can

affect citizens and businesses in a tangible

way. For households in the EU it is estimated that transport accounts roughly for 13% of

their total final consumption. Improved infrastructure and optimised performance of

multimodal logistic chains can help to reduce logistics costs.

9 Eurostat Labour Force Survey, 2016 data, for NACE H: 'Transportation and Storage'. 10 Eurostat National Accounts, 2015 data, for NACE H: 'Transportation and Storage'.

Figure 1: Share and growth of employment of women in the EU2811 transport sector

(2008-2016)

SOURCE: EUROSTAT LABOUR FORCE SURVEY.

For high-value added products and services produced in Europe, transport costs may not

be a very significant proportion of total costs, but the reliability of logistic is critical

to the functioning of increasingly complex

value chains. In order to seize transport-related growth opportunities and reduce

costs related to transportation, a number of horizontal challenges need to be addressed.

These can be grouped under three headings: market functioning, infrastructure and

negative externalities.

2.1. Sub-optimal market functioning

The transport policies in the EU are

characterised by divergent national priorities. Fragmentation of the transport

market will continue to limit the quality of

transport services in Europe and will leave growth potential untapped, unless European

policy initiatives towards a Single Market for transport, such as the ones quoted above,

are thoroughly implemented at national level.

11 The countries covered by data in this factsheet are the EU28, unless otherwise specified.

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In addition, gaps in the social legislation

related to transport and divergent national practices have led to deteriorating social

conditions for transport workers and may also worsen the quality of transport services.

Market opening and social cohesion are thus intrinsically linked.

Rail transport in particular has been struggling to achieve its potential, despite its

comparative advantages (notably speed and comfort for passengers and economies of

scale for freight) over medium to long dis-tances and despite the significant contribution

it can make to both the decarbonisation of transport and socially inclusive mobility.

Rail freight services suffer from low quality and reliability, due to the lack of coordination

in cross-border capacity offer, traffic manage-ment and planning of infrastructure works.

The creation of a Single European Rail Area requires major efforts to achieve

technical interoperability and to ensure that rolling stock is able to run across national

borders. In addition, standardisation of systems and equipment in its broader sense

is crucial to gain efficiency and reduce costs. Specific EU legislation, such as the Technical

Pillar of the 4th Railway Package, aims at

promoting interoperability. The rules are implemented with the assistance of the

European Union Agency for Railways (ERA).

The lack of effective competition may explain why in many EU countries rail

transport has not developed the customer-

oriented services, innovative business models and costs/price reductions that can be

witnessed after market opening in other transport modes. The degree of competition

in the railway sector, measured as the total market share of all but the biggest railway

companies, is not high (see Figure 2). Although a low number of competitors may

reflect the small size of a market, various

barriers to entry still hamper the development of competition in rail.

The rail freight market has been fully open

to competition since 2007. Between 2010 and 2015, the market shares of competitors conti-

nued to increase in most EU countries, most

significantly in Belgium, Bulgaria, the Czech Republic, Germany and Hungary. Exceptions

to this growth trend were Estonia and France.

In the rail passenger market, the market shares of competitors are lower and less

diverse, and also depend on the degree of

liberalisation, which varies across countries. In most countries incumbent rail companies

have control over 80% of the market, except for Poland (48%), Sweden (67%), Italy

(77%) and the United Kingdom (where there is no incumbent). In 10 countries there were

still no alternative operators in 2015.

The 4th Railway Package is set to complete

the market opening process by dismantling the remaining legal monopolies in domestic

passenger markets. It introduces the principle of competitive tendering for public service

contracts (PSCs) and improves the way infrastructure is governed to create a non-

discriminatory environment. However, until

the package is fully implemented, important challenges remain to be addressed on the

ground.

Rail passenger market opening has been pursued by several EU countries in advance of

the legal deadlines imposed by EU law, to

different degrees and with varying results. New commercial (open access) services have

been introduced in the Czech Republic, Germany, Italy, Austria, Sweden and the

United Kingdom. While the reasons for success or failure in operating a new rail business are

diverse, a common trait is that, in the absence of safeguards against unfair practices, new

entrants face serious obstacles.

In particular, new commercial operators

still face discrimination in obtaining access to rail infrastructure and

essential service facilities, such as stations and maintenance workshops, which are often

owned and operated by incumbents. Besides,

incumbents may engage in anti-competitive behaviour or rely on cross-subsidies to keep

competitors out of the market.

In 2015, two thirds of all EU passenger rail services were provided under PSCs, especially

for regional and suburban traffic. This

average hides significant differences across countries. In Denmark, Ireland, Greece,

Croatia and Luxembourg, all passenger services are covered by PSCs. The use of

competitive tenders for the award of these contracts is a key indicator of the degree of

market opening. In the EU, the majority of PSCs are still awarded directly to incumbents.

While the 4th Railway Package has introduced

the principle of competitive tendering, it will take time (up to 2023) before the use of

tenders is widespread.

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Figure 2: Market share of all but the principal railway undertakings (2015)

SOURCE: DG MOVE, RAIL MARKET MONITORING SURVEY 2015, IRG RAIL ANNUAL REPORTS. GREECE, IRELAND, LITHUANIA, LUXEMBOURG AND

FINLAND SCORE 0 IN BOTH INDICATORS. PASSENGER DATA: DUE TO A METHODOLOGICAL CHANGE IN REPORTING, 2015 VALUES ARE MOSTLY

ESTIMATED BY DG MOVE. NOT APPLICABLE TO CYPRUS AND MALTA.

In the road transport sector, the market for international (intra-EU) freight and

passenger services has been entirely opened

to competition, but domestic transport remains largely protected. On the freight

side, 'cabotage', i.e. domestic transport performed by foreign hauliers, is subject to

restrictions. As a consequence, operators face difficulties in optimising their operations

and one in two vehicles operating domestic transport outside of its country of

registration runs empty12.

The performance of national hauliers can to

some extent be compared by looking at the shares of home-based vehicles in exports

and imports from other EU countries. Under certain conditions a similar distribution of the

transport activities between hauliers from

the importing and hauliers from the exporting country might be expected. In

reality, however, this is rarely the case in the EU.

Hauliers from some of the new EU countries,

e.g. Poland, Bulgaria, Croatia and Romania

are largely dominating the transport opera-

12 European Commission (2014), Report from the Commission to the European Parliament and the

Council on the State of the Union Road Transport Market [COM(2014) 222].

tions in the external trade of their respective countries. This reflects low labour costs.

The relative competitiveness of hauliers from the new EU countries also shows in their

share in cross-trade (transport between two countries neither of which is the country of

registration of the haulier): they account for 80% of all cross-trade in the EU. At the

other end of the spectrum, hauliers from

countries such as Sweden, France, Italy, Belgium and Denmark appear to be less

competitive and have a relatively low market share when it comes to carrying the exports

and imports of their own economies. With a combined share of less than 2% in total

activity, these countries are more or less absent from the cross-trade market.

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Figure 3: Share of home-based vehicles in tonne-km generated in exports to and imports from other EU28 countries (%, 2016)

SOURCE: EUROSTAT. DATA FOR CY AND MT ARE EITHER NOT AVAILABLE OR NOT RELIABLE.

On the passenger side, access to the

domestic market continues to be heavily restricted in several EU countries. They

shield incumbent monopolists from competition. However, liberalisation of long-

distance coach services has been progressing in various EU countries: Sweden

in 2012, Germany in 2013, Italy in 2014 and

France in 2015.

As part of the initiatives of the second wave of the mobility package, the Commission

proposes a Directive on Access to Passenger and Coach Services. The main objective is to

enhance the accessibility and competiti-

veness of inter-urban regular services and to further open this market13.

Europe's aviation sector has already

benefited from the full market liberalisation for airlines. One of the main problems

affecting its performance is the fragmented

EU airspace that leads to high operating costs for airlines, as it limits the optimisation

13 Regulation (EC) No 1073/2009 of the Euro-

pean Parliament and of the Council of 21 October 2009 on common rules for access to the international market for coach and bus services,

and amending Regulation (EC) No 561/2006, OJ L 300, 14.11.2009.

of flight paths or duplicating costly functions.

As a consequence, in 2014 the unit costs for providing air navigation service were around

35% lower in the US than in Europe14. Full implementation of the Single European Sky

(SES) is a constant challenge given the resistance from many EU countries, often

driven by social concerns.

In addition, major European airports are

predicted to face a capacity crunch in the near future. It has been estimated that by

2035 there will be a surplus annual demand of some two million flights which European

airports will be unable to accommodate due

to capacity shortages. The Benelux countries, Germany and the United Kingdom

risk having the highest unaccommodated demand in 203515.

These two issues are

seriously impeding the European aviation sector's ability to grow sustainably and

compete internationally. Moreover, they are causing congestion, delays and rising costs.

14 Eurocontrol, US-Europe continental compa-

rison of ANS cost-efficiency trends, 2014. 15 European Observatory on Airport Capacity & Quality, Learning from national, regional and local

strategies on airport capacity, Final Report of Task Force, May 2015.

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Challenges also include creating of a better

market access and investment opportunities with non-EU countries and maintaining high

EU safety, security and environmental standards. These are pre-requisites for a

competitive aviation sector.

Maritime transport needs to overcome

bottlenecks and act on administrative simplification, port capacity and efficiency,

connection to the hinterland and access to financing. The lack of high-quality

infrastructure or low-performing port services can result in significant extra costs

for shippers, transport operators and consumers: for EU companies, port and

terminal costs may represent up to 25% of

the total door-to-door logistic cost. The 'Ports Regulation' of 201716 introduces rules

on transparent public funding to improve market access and make port investments

and port operations more efficient.

Inland water transport stands to lose its

comparative advantage as an efficient, low external costs transport mode, unless long-

term structural changes are made to improve the quality of its operating

conditions. Suitable means are investment in better infrastructure, skills, digitalisation and

integration into the logistics chain. This requires both the definition of common

standards at EU level and cross-border

cooperation between EU countries, e.g. in the framework of the Danube Strategy.

Another common challenge of market

functioning is to create conditions of fair competition between the various transport

operators in a market that is not distorted by

illegal state aid or by abuses related to the control over infrastructure.

State funding of regional airports is often

needed to ensure territorial cohesion. However, undue distortion of competition in

subsidising economically unviable airports

must be avoided. Sustainable growth of airports and airlines requires full compliance

with state aid rules. Besides, there are claims of alleged unfair competition practices

16 Regulation (EU) 2017/352 of the European

Parliament and of the Council of 15 February 2017 establishing a framework for the provision of port services and common rules on the

financial transparency of ports, OJ L 57, 3.3.2017.

from air carriers of non-EU countries that

threaten EU carriers.

As for maritime transport, the 'Ports Regulation' requires that financial relations

between public authorities and the port managing body, or any other entity that

provides port services or dredging and which

are in receipt of public funds, must be reflected in a transparent way in the

accounting system. Thus, the risk of undue cross-subsidisation is reduced.

On rail, cases of (restructuring) aid and

overcompensation of public service

obligations are frequent. In addition, failure to separate infrastructure managers and

service operators is not conducive to fair competition or efficient exploitation of the

infrastructure.

The Commission monitors the functioning of

transport services for consumers in the Consumer Markets Scoreboard, which ranks

over 40 consumer markets. Results of the 2015 survey17 show that train services

continue to be perceived by the EU's consumers as one of the poorest performing

service sectors (24th out of the 29 services markets surveyed in 2015), with the fourth

highest incidence of problems.

17 Market Monitoring Survey 2015 published in the 2016 Consumer Markets Scoreboard.

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Figure 4: Market Performance Index for three transport markets (2015)

SOURCE: MARKET MONITORING SURVEY 2015. THE MPI INDICATES TO WHAT EXTENT A GIVEN MARKET BRINGS THE DESIRED OUTCOME TO

CONSUMERS. IT IS A COMPOSITE INDEX INCORPORATING FIVE KEY COMPONENTS: CONSUMERS' TRUST IN RETAILERS/PROVIDERS, EASE OF

COMPARING DIFFERENT OFFERS, THE EXTENT OF PROBLEMS AND DETRIMENT, EXPECTATIONS AND CHOICE. EACH COMPONENT IS WEIGHTED

ACCORDING TO THE IMPORTANCE IT WAS GIVEN BY THE RESPONDENT AND THE MAXIMUM TOTAL SCORE IS 100.

The heterogeneity of EU countries' scores18

is almost twice as high as observed for all services on average. Bulgaria, Croatia,

Romania and Italy are at the bottom of the

ranking.

While airline services are evaluated relatively well overall (4th place in the service markets

ranking), a fifth of all cross-border complaints received by the network of

European Consumer Centres relate to

passenger or luggage transport by air19. A Eurobarometer survey20 on passenger rights

in all modes of transport shows that the level of public awareness (31%) has remained

stable since previous surveys in 2005 and 2009 (on air passenger rights only).

On passengers with disabilities or with reduced mobility, 81% of those who

requested assistance when travelling were satisfied with the assistance provided. The

market for tram, local bus and metro services performs close to the service sector

average (15th place).

On the social dimension, an ex-post

evaluation of social legislation in road transport and its enforcement, carried out in

18 As measured by the standard deviation of the Market Performance Indicator (MPI). 19 The European Consumer Centres Network 2013 Annual Report. http://ec.europa.eu/consumers/ecc/docs/report_

ecc-net_2013_en.pdf. 20 Special Eurobarometer 420, December 2014.

2015-201721, concluded that the rules in

place do not effectively and efficiently address the risks of deterioration in working

conditions and distortions of competition.

This is due to shortcomings in the legal framework. Certain rules are unclear,

unsuitable or difficult to enforce. This results in differences in implementation between EU

countries of the common rules and creates a risk of fragmentation of the internal market.

As part of the 'Mobility Package', the rules are currently being clarified and revised. This

should clarify minimum standards for social

protection and pay of posted workers in the (road) transport sector.

In the maritime sector, there has been

progress since the entry into force of the Directive incorporating the 2006

International Labour Organization Maritime

Convention in EU law22. In aviation, the situation of highly mobile workers deserves

attention. Whereas the 'home base' concept has been introduced into the Regulation on

the coordination of social security systems in

21 https://ec.europa.eu/transport/sites/

transport/files/facts-fundings/evaluations/doc/2016-ex-post-eval-road-transport-social-legislation-final-report.pdf. 22 Council Directive 2009/13/EC of 16 February

2009 implementing the Agreement concluded by the European Community Ship owners' Associations (ECSA) and the European Transport

Workers' Federation (ETF) on the Maritime Labour Convention, 2006, OJ L 124, 20.5.2009.

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201223, shortcomings remain as to clarifying

rules on the applicable labour law for highly mobile workers and on the competent court

in charge of disputes.

2.2. Infrastructure deficiencies

Since the global economic crisis, the EU has

been suffering from low levels of investment in transport infrastructure.

This has held back modernisation of the EU's transport system. Collective and coordinated

efforts at European level, recently boosted by the Investment Plan for Europe, need to

reverse this downward trend.

In particular the trans-European transport

network (TEN-T) requires investment in new infrastructure, refurbishment and

modernisation of the existing network. Better coordination is needed between EU

countries on cross-border infrastructure

projects.

While for some EU countries the main issue is to upgrade and maintain existing

infrastructure, others need to develop or expand their transport network. The

availability and quality of transport

infrastructure is particularly low in the Eastern part of the European Union.

Renovation and upgrading of an otherwise extensive railway network is also a fairly

common challenge there. In the last two decades efforts have concentrated on

completing the network of motorways.

Building missing links at borders

between EU countries and along key European routes, removing bottlenecks or

interconnecting transport modes in terminals is vital for the Single Market and for

connecting Europe with external markets and trade partners. The smooth functioning

of the European network requires integration

and interconnection of all modes of transport, including equipment for traffic

management and innovative technologies.

Road and rail infrastructure across the EU has been degrading because of too

23 Regulation (EU) No 465/2012 of the European Parliament and of the Council of 22 May 2012

amending Regulation (EC) No 883/2004 on the coordination of social security systems and Regulation (EC) No 987/2009 laying down the

procedure for implementing Regulation (EC) No 883/2004, OJ L 149, 8.6.2012.

little road maintenance. Maintenance

budgets have often experienced severe cuts and have not evolved in line with the

increasing length of infrastructure and the ageing of crucial links. This has led to a

worsening of the state of roads in many EU countries and has generated higher risks

of accidents, congestion, increased noise and a reduced service to society.

The adaptation of infrastructure to new mobility patterns and the deployment of

infrastructure for clean, alternative fuels, pose additional challenges that require new

investments and a different approach to the design of networks and business models.

To address infrastructure bottlenecks on routes of key interest for the EU, suitable

planning has to be put in place. Conditions have to be created to ensure full

absorption of funds earmarked in the Connecting Europe Facility for rail

projects in EU countries that are eligible for

the Cohesion Fund. For instance, in the cases of the Baltic States and Poland, the

Commission announced on 26 June 2017 almost half a billion euro for two projects on

the global Rail Baltica project (EUR 110 million for the joint project by the

consortium RB Rail, between Estonia, Latvia and Lithuania and EUR 338 million for the

Białystok – Ełk line).

In Greece, Spain, France, Italy and Portugal,

further improvement of port services and port hinterland connections by rail

(and/or inland waterways) is crucial. Rail investments to implement rail corridors and

revitalise rail freight transport is a priority

for Spain and Portugal.

The upgrading and modernisation of infrastructures is needed in the inland

waterway network of Belgium, Germany, France the Netherland and Austria.

Investments in the navigability of the

Bulgarian, Hungarian and Romanian inland waterways, in particular the Danube, could

remove significant bottlenecks in the EU transport network24.

24 Cf. EU Rhine-Danube Corridor Work Plan, Danube Ministerial Declaration of June 2016.

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Figure 5: Satisfaction with infrastructure quality (2016-2017)

SOURCE: WORLD ECONOMIC FORUM, THE GLOBAL COMPETITIVENESS REPORT DATABASE 2016-2017. SCALE FROM 1 [EXTREMELY

UNDERDEVELOPED] TO 7 [EXTENSIVE AND EFFICIENT BY INTERNATIONAL STANDARDS]. THE COUNTRIES WERE RANKED ON THEIR OVERALL

PERFORMANCE ON TRANSPORT INFRASTRUCTURE.

In the light of a wave of technological

innovation and disruptive business models (such as ride sharing), both the

possibilities and demand for making trans-port safer, more efficient and sustainable

have increased. Digital technologies help

reduce human error. They can also create a truly multimodal transport system and spur

social innovation. The market potential of cooperative, connected and automated

driving is expected to lead to the creation of many new jobs.

Cooperative intelligent transport systems (C-ITS) allow road users and

traffic managers to share information and use it to coordinate their actions. C-ITS are

based on technologies which allow vehicles to 'talk' to each other and to the transport

infrastructure. In addition to what drivers can immediately see around them, all parts

of the transport system are in this way able to share information.

Communication between vehicles, infra-structure and other road users is also crucial

to increase the safety of future automated vehicles and their full integration in the

overall transport system.

Despite European initiatives, such as

intelligent transport systems for road, the air traffic management system (SESAR) and the

European Rail Traffic Management System (ERTMS), challenges emanate mainly from

the fragmented deployment of C-ITS across

EU countries. This creates barriers within the Single Market and can hamper the

interoperability between different electronic systems and technological standards.

The deployment of intelligent transport systems for road and its interface with other

modes varies across Europe. Yet, there are a number of common priorities and initiatives

for collaboration among EU countries. Further commitment of all EU countries to

the deployment of continuous and inter-

operable intelligent transport systems will be vital for tapping the full benefit that it can

bring to the Single Market and the common transport area including economic and

environmental benefits.

Given the regional specificities and

differences in transport patterns, a possible indicator to compare the situation among the

EU countries is the index of satisfaction with transport infrastructure quality. It

is produced by the World Economic Forum for its Global Competitiveness Report (see

Figure 5). It points out that the overall satisfaction with transport infrastructure is

the lowest in the Central and Eastern European countries, namely Bulgaria,

Poland, Romania, Slovakia and Slovenia, but

also Greece and Malta score rather poorly. By contrast, Germany, Spain, Finland,

France and the Netherlands rank the highest.

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Figure 6: Infrastructure quality under Logistics Performance Index (2016)

SOURCE: WORLD BANK LOGISTIC PERFORMANCE INDEX. THE SCORES DEMONSTRATE COMPARATIVE PERFORMANCE (LOWEST SCORE TO HIGHEST

SCORE) FROM 1 TO 5.

Analysis of the World Bank logistics performance index25 (see Figure 6) shows

a slightly different ranking, but the overall

picture is similar. One of the components of this composite index is the quality of trade

and transport-related infrastructure (e.g. ports, railroads, roads, information

technology). The index is again the lowest for Bulgaria and Romania. Croatia, Cyprus

and Malta do not score much better. The best performing European countries are

Germany, the Netherlands and Sweden.

It is worth adding that concerning the global

logistics performance index, 23 EU countries are ranked in the top 50 out of the 160

countries compared by the World Bank, with Germany, Luxembourg, the Netherlands and

Sweden occupying the first four places.

25 The logistics performance index (LPI) is the weighted average of the country scores on the six

key dimensions: efficiency of the clearance process, quality of trade and transport related infrastructure, ease of arranging competitively priced shipments, competence and quality of

logistics services, ability to track and trace consignments, timeliness of shipments in reaching destination within the scheduled or

expected delivery time. The LPI consists of both qualitative and quantitative measures.

2.3. Low-emission mobility and negative externalities

The main external costs of transport are those linked to greenhouse gas emis-

sions, local air pollution, congestion, capacity bottlenecks, accidents and

noise. In particular, a strong impact of transport on energy use and climate change

has to be addressed. In 2015, at least 33%

of the final energy consumption and 24% of greenhouse gas emissions (23% more GHG

emissions than in 1990) in the EU stemmed from transport26.

Final energy consumption in transport27

decreased between 2005 and 2015 both due

to the improvements in energy efficiency of passenger cars and to the economic crisis.

The latter led to a stabilisation of passenger traffic and a decrease in freight traffic.

Under the adopted policies, the declining

trend in emissions (since 2005) from

transport is expected to continue until 2030 (-12% for 2005-2030)28. The main drivers

are fuel efficiency gains. They are encouraged by CO2 standards for light duty

vehicles, increasing fossil fuel prices over

26 Source: European Commission, EU Transport

in Figures, Statistical Pocketbook 2017. 27 Excluding pipeline transport. 28 EU Reference scenario 2016, based on the

PRIMES-TREMOVE transport model developed by E3M-Lab (ICCS/NTUA).

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time, and the use of less CO2-intensive fuels.

Yet, greater efforts will be needed after 2020 if the global targets to reduce greenhouse

gas emissions are to be met. It is expected that the cost of air pollution from road

transport will remain high, also due to congestion and an expected growing demand

for transport. Thus, the current transport system might not be sustainable.

CO2 emissions and air pollution from transport are the major environmental

concerns related to transport activity. The levels of CO2 emissions are difficult to

attribute to specific countries. They are calculated on the basis of fuels sold and do

not correspond to the transport activity

performed within the countries' borders. This leads to biased values especially for transit

countries. In the case of maritime or air transport there are additional issues with

attributing territoriality for emissions for the parts of the journeys taking place over a

given territory.

Unlike other sectors, aviation emissions

are forecast to increase dramatically as air traffic grows worldwide. CO2 emissions have

increased by about 80% between 1990 and 2014, and are forecast to grow by a further

44% between 2014 and 203529. The aviation

industry, through research and innovation,

and more efficient operations and air traffic

management, has made some progress in addressing the sector's impact on the

environment. However, such measures are not sufficient to keep pace with the growth

of traffic.

Further, substantial societal and economic

costs of transport are related to unsatisfactory safety in road transport.

Despite a positive trend in the past years, in 2016, 25 500 people lost their lives on EU

roads and a further 135 000 people were seriously injured30. Until recently, the overall

trend was close to the reference path to halving the number of fatalities in 2020

compared to 2010. The latest data indicate

that the pace of improvement has stalled. The annual number of fatalities in the EU

remained constant over the last three years.

29 EEA, EASA and Eurocontrol (2016), European Aviation Environmental Report 2016. 30 CARE (EU road accidents database) or national publications.

The cost of road accidents to society is very

high, especially taking into consideration that apart from road deaths, accidents also

cause thousands of slight and serious injuries every year. For every death on

Europe's roads there are an estimated 4 permanently disabling injuries, such as

damage to the brain or spinal cord, 8 serious injuries and 50 minor injuries. The external

costs of road accidents were estimated at

1.7% of GDP for 200831.

Congestion has to be dealt with urgently, considering the expected growth in transport

demand. The indicator produced by the Joint Research Centre to evaluate the congestion

level measures hours spent by cars in road

congestion every year. The countries with the highest congestion level are Malta, the

United Kingdom, Greece, Belgium and Italy (see figure 7).

Bearing in mind that current budgetary

limitations do not allow for substantial

investments, there is still scope for improvement in the way the existing

infrastructure is actually used. A tool for fostering a more efficient use of roads is

time-differentiated congestion charging. However, its application on EU roads today is

marginal. Only five cities impose a congestion charge for accessing the city

centres. On interurban roads, time-

differentiated charges are applied to all vehicles only on a handful of short stretches

of motorways in France and Spain, as well as on one motorway stretch in the United

Kingdom. The Czech Republic also charges a higher toll on Friday evenings, but it applies

only to heavy goods vehicles. While these schemes have proven to be effective in

limiting peak-hour congestion, their cove-

rage is insufficient to reduce the overall burden of congestion in the EU.

31 CE Delft, Infras, Fraunhofer ISI, External Costs

of Transport in Europe - Update Study for 2008, Delft, CE Delft, September 2011.

Page 13 |

Figure 7: Average annual hours spent in congestion per vehicle (2015)

DATA SOURCE: EUROPEAN COMMISSION, JOINT RESEARCH CENTRE, BASED ON TOMTOM DATA. NO DATA AVAILABLE FOR CYPRUS. FOR

METHODOLOGICAL REASONS, THE DATA FOR MALTA ARE OF LIMITED COMPARABILITY WITH THE ONES FOR THE OTHER COUNTRIES STUDIED.

The shift to alternative fuels vehicles varies substantially across EU countries,

although there is a general positive trend in most of the countries. The share of plug-in

electric vehicles (PEV) in new passenger car registrations indicates the progress of

deployment of electric cars. In 2016, according to the European Alternative Fuels

Observatory, the Netherlands was in the

lead, mainly owing to a large number of

newly registered plug-in hybrid vehicles (PHEV). They represented almost 5% of the

new registrations of passenger vehicles. It was followed by Sweden and Belgium.

France and Austria have the highest share of battery electric vehicles (BEV) in new

registrations. At the bottom of the scale are Greece, Bulgaria, Malta and Slovakia with

0.1% share of PEVs in new registrations of

passenger cars.

Figure 8: PEV market share in new passenger cars (M1) registrations (2016)

SOURCE: EUROPEAN ALTERNATIVE FUELS OBSERVATORY

0%

1%

2%

3%

4%

5%

6%

NL SE BE UK FR AT FI PT DE LU DK IE SI LT CY ES LV HU EE RO IT HR PL CZ EL BG MT SK

Battery electric vehicles Other plug-in electric vehicles

Page 14 |

Figure 9: Sector regulation - air passenger, rail and road freight transport (2013)

DATA SOURCE: OECD (2013), PRODUCT MARKET REGULATION DATABASE. WWW.OECD.ORG/ECONOMY/PMR

THE REGULATORY AND MARKET CONDITIONS ARE BROKEN DOWN INTO VARIOUS CATEGORIES WITH EQUAL WEIGHTS (ENTRY REGULATION AND

PRICE CONTROLS FOR ROAD FREIGHT; ENTRY REGULATION AND PUBLIC OWNERSHIP FOR AIR PASSENGER TRANSPORT; ENTRY REGULATION,

PUBLIC OWNERSHIP, VERTICAL INTEGRATION AND MARKET STRUCTURE FOR RAIL). LOW VALUES INDICATE LIGHT REGULATORY BURDEN (INDEX

SCALE OF 0 - 6 FROM LEAST TO MOST RESTRICTIVE). BULGARIA, GERMANY, GREECE, SPAIN, ITALY, HUNGARY, AUSTRIA, SLOVAKIA AND THE

UNITED KINGDOM SCORE 0 FOR AIR PASSENGER TRANSPORT. THE COUNTRIES WERE RANKED ON THEIR AVERAGE PERFORMANCE FOR THE THREE

SECTORS.

3. IDENTIFICATION OF POLICY LEVERS

TO ADDRESS THE CHALLENGES

Addressing the gaps in the single European transport area is expected to

improve transport services in Europe. Thus it

constitutes a prime policy lever for addressing the identified challenges. More

specifically, for rail transport it primarily means:

completing market opening;

introducing the principle of competition

for public service contracts; ensuring non-discriminatory access to

infrastructure; reducing technical and regulatory

barriers for market entry; the single signalling system;

common passenger rights with fewer national exemptions;

harmonised technical standards across

Europe; and fair working conditions32.

The 4th Railway Package of 2016 aims to

open up the market for rail passenger transport services. It establishes open

access rights for railway companies in the EU

from 2020 and lays down the principle of

32 EPRS (2014) The Cost of Non- Europe in the

Single Market in Transport and Tourism. I - Road transport and railways.

competitive awards for public service

contracts. The policy focus will now have to be on effective enforcement of market

opening and competition generation based on sectorial legislations and competition

policy instruments.

For road transport, the proposed measures

include;

completing market opening; better enforcing existing rules;

setting common vehicle standards;

addressing road charging systems and technologies;

making greater efforts for road safety; and addressing environmental sustaina-

bility and passenger rights issues33.

On social issues, the Commission is

launching initiatives to improve working conditions in road transport through the

'Europe on the Move' package. This includes a proposal34 to clarify the application of EU

rules on the posting of workers to the road transport sector.

33 Ibid. 34 COM(2017) 278.

Page 15 |

Following the successful liberalisation of air

transport that has benefited EU consumers35, action should now focus on:

creating high quality jobs in aviation;

protecting passenger rights; making the best use of innovation and

digital technologies;

and ensuring aviation's contribution to a resilient Energy Union and climate

change mitigation.

Maritime transport would benefit from:

tackling direct state aid to terminal

managers and maritime companies; liberalisation and transparency of port

services; involvement of non-European ports in

Motorways of the Seas; and proper emission taxation36.

The establishment of a European Maritime Single Window environment, endorsed by

EU countries in the 'Valletta Declaration' in 2017, is central to simplifying and

harmonising of reporting formalities, reducing administrative and custom costs,

and taking full advantage of digital means to

optimise logistic chains.

Inland waterway transport requires policies addressing administrative and

regulatory barriers, unused capacity and environmental externalities37.

The quality and capacity of transport infrastructure will have to be improved to

handle the expected growth in passenger and goods mobility. Given the likelihood that

public funds will be limited, increased investment from the private sector in

strategic transport infrastructure will be

essential38.

Investment levels in infrastructure have been low since the financial crisis of

2008. The cost of developing transport infrastructure in the EU is estimated at over

EUR 1.5 trillion for 2010-2030. Completion

of the TEN-T core network alone will

35 International Transport Forum Discussion Paper (2015/04), EU Air Transport Liberalisation

Process, Impacts and Future Considerations. 36 Ibid. 37 Ibid. 38 OECD (2011), Strategic Transport Infrastruc-ture Needs to 2030, Main Findings.

require about EUR 500 billion until 2030.

This compares with total investment of EUR 859 billion in transport infrastructure from

2000 to 200639. It is estimated that the completion of the TEN-T core network could

spur the economy. It would create 1.8% additional GDP in 2030 compared to 2015

and 10 million jobs40.

In 2017, the Commission agreed to invest

EUR 2.7 billion in 152 key transport projects41 that support competitive, clean

and connected mobility in Europe. In this way the Commission is delivering on its

Investment Plan for Europe and on Europe's connectivity, including the agenda set out in

the Communication 'Europe on the Move'.

Selected projects are mostly concentrated on

the strategic sections of Europe's transport network (the TEN-T core

network) to ensure the highest EU added-value and impact. The largest part of the

funding will be devoted to:

developing the European rail network

(EUR 1.8 billion); decarbonising and upgrading road

transport, developing intelligent transport systems (EUR 359.2 million);

and deploying air traffic management

(ATM) systems (EUR 311.3 million).

This investment is made under the Connecting Europe Facility (CEF), the

EU's financial mechanism supporting infrastructure networks. Over the period

2014-2020, it will unlock EUR 41.6 billion of

public and private financing. The Commission is allocating EUR 11.3 billion

from the CEF budget of the Cohesion Fund for the eligible 15 EU countries to further

improve their infrastructure and reduce differences between countries. For 2014-

39 Report from the Commission to the European Parliament and the Council, on financial instru-ments supported by general budget according to

Art 140.8 of the Financial Regulation as of 31 December 2015. 40 Fraunhofer ISI (2015), Cost of non-completion

of the TEN-T. http://ec.europa.eu/transport/themes/infrastructure/studies/doc/2015-06-fraunhofer-cost-of-non-completion-of-the-ten-t.pdf. 41 European Commission - Factsheet Connecting Europe Facility – Results of the 2016 Transport calls for proposals.

http://europa.eu/rapid/press-release_MEMO-17-1731_en.htm

Page 16 |

2020, these eligible 15 EU countries are:

Bulgaria, the Czech Republic, Estonia, Greece, Croatia, Hungary, Cyprus, Latvia,

Lithuania, Malta, Poland, Portugal, Romania, Slovakia and Slovenia.

Policies should take into account the fact

that EU countries have different infra-

structure needs. Increased investment in this field should take account of the

investment pattern before and after the recent financial crisis. Policies that promote

spending in transport infrastructure encourage growth, provided they do not

create excess capacity. Providing too much infrastructure has been shown to create

inefficiencies by diverting resources away

from more productive investments42. However, EU countries in which the stock of

infrastructure is low, or has suffered from underinvestment, could certainly benefit

from higher infrastructure investment. Efforts also have to be made to complete the

multi-modal core network, which is the central part of the trans-European transport

network policy43.

There should be more focus in all EU

countries on developing and deploying of innovative infrastructure techno-

logies and elements. This will improve both a demand-based and sustainable

provision of transport services and individual

mobility. Based on the Commission's intelligent transport systems (ITS)

action plan of 2008, a dedicated legal framework was established with the entry

into force of the ITS Directive in 201044. This framework supports the harmonised

deployment in the EU of ITS solutions in road transport.

In 2016, the Commission has presented a European strategy for the coordinated

deployment of cooperative intelligent transport systems (C-ITS)45 to avoid a

42 European Commission (2014), Infrastructure in the EU: Developments and Impact on Growth,

Occasional Papers 203. 43 Fraunhofer ISI (2015), Cost of non-completion of the TEN-T. 44 Directive 2010/40/EU of the European Parliament and of the Council of 7 July 2010 on

the framework for the deployment of Intelligent Transport Systems in the field of road transport and for interfaces with other modes of transport,

OJ L 207, 6.8.2010. 45 COM(2016) 766 of 30.11.2016.

fragmented Single Market for cooperative

transport and connected and automated driving. The strategy recommends actions to

create synergies between different initiatives and improve interoperability. At the same

time, it addresses the most critical issues, including cyber-security and data protection. More recently, the 'Europe on the Move' Communication (2017) discussed the role of

C-ITS in enabling cooperative, connected

and automated mobility. It highlighted the importance of developments in communi-

cation technologies and of rolling out 5G.

Under the Horizon 2020 work programme 2016-2017, a dedicated call was launched

for project proposals on automated road

transport.

Furthermore, policies applying the 'user pays' and 'polluter pays' principles and

monetary incentives to users, consumers and businesses, could help to reduce the

environmental impact and internalise

the external costs of transport46.

Infrastructure charging and taxes combined with innovative mechanisms

to promote the financing of infra-structure for sustainable transport47

can

address the budgetary constraints for

infrastructure maintenance and shape the mobility patterns and freight flows48. Notably

in road transport, a greater application of efficiently organised distance-based charges

for road usage would create regular revenue streams for sustainable and efficient long-

term maintenance and development of the network.

Greater use of the possibility to charge for external costs would help to apply the

'polluter pays' principle. However, the current infrastructure charging and

transport taxation schemes substan-tially differ among EU countries, possibly

creating market distortions and

inefficiencies. The systems in place also treat some modes and fuels in a preferential

way, leading to unsustainable mobility choices.

46 CE Delft (2008), Road infrastructure cost and

revenue in Europe. 47 E.g. mark-ups applied on road charges. 48 OECD (2007), Transport Infrastructure

Charges and Capacity Choice. Self-Financing Road Maintenance and Construction, Round Table 135.

Page 17 |

Since the highest share of CO2 emissions

in transport comes from the road sector, it is also the area where EU countries have

made the most effort to mitigate this impact. Yet, they often use different

approaches. There is a need to provide consistent incentives to users to promote

the most energy efficient trucks. An effective way would be to differentiate tolls

according to the CO2 performance of

trucks. Other measures besides taxation that can address negative externalities

consist in:

deploying clean fuels for transport; deploying intelligent transport systems;

setting efficiency standards for vehicles;

sharing best practices (including eco-driving);

and encouraging the use of more energy efficient transport modes, in particular

collective transport.

These measures have been reiterated in the

Communications 'A European Strategy for Low-Emission Mobility'49 and 'Europe on the

Move'.

As part of the second wave of proposals of the mobility package, as mentioned in the

introduction, the Commission proposes new

CO2 standards for cars and vans after 202050 which will help Member States to

achieve their 2030 climate and energy targets. The package also includes a

revision of the Clean Vehicles Directive51 which will help to stimulate

additional public demand for these vehicles in the EU and. Finally, the package contains

an Action Plan to boost investment in

alternative fuel infrastructure52 and develop a network of fast and interoperable

recharging and fuelling stations across the Union.

In the maritime sector, environmentally

differentiated port charges can stimulate

investments in greener vessels.

49 COM(2016) 501. 50 COM(2017) 676. 51 COM(2017) 653. 52 COM(2017) 652.

4. EXAMINATION OF POLICY STATE OF

PLAY

4.1. Market access policies

The single European transport area, as

envisaged by the Commission, addresses the market functioning issues by opening the

transport sector to competition in a harmonised manner. This does not exclude

the need for action at national level. The EU economy would benefit from a lowering of

market entry barriers and a reduction of the regulatory burden in transport markets.

Despite some progress, legal barriers to market entry persist in transport sectors in

most EU countries. The latest OECD product market regulation data (see Figure 9) which

estimate the restrictiveness of market regulations show that the situation has

improved in air passenger transport in

almost all countries for which data are available. It remained broadly unchanged

for road freight53 compared to 2008. Rail transport remains the sector with the

most restrictive regulations: admi-nistrative, technical and regulatory burdens

are still present in most of the countries54.

A good example of the positive impacts of

deregulation can be found on the long-distance coach market, where various

countries have opened their markets (Sweden in 2012, Germany in 2013, Italy in

2014 and France in 2015). Positive developments are already visible, especially

in Germany, where coach travellers doubled

to 16 million a year after the market opening (all but 4 million on domestic routes) and

accounted for 11% of the public-transport market. Cross-border travel has also surged.

Despites some progress, the implemen-

tation of the functional airspace blocks

is still not satisfactory in most of the countries in the EU. There are still infringe-

ment procedures against 21 Member States participating in six of the nine functional

airspace blocks. The procedures concern lack

53 The OECD data do not indicate any improvement of the situation in the road freight sector following the adoption of Regulation (EC)

No 1072/2009 on common rules for access to the international road haulage market, OJ L 300, 14.11.2009. 54 OECD (2013), Product Market Regulation Database.

Page 18 |

of optimal provision of navigation services

and the use of airspace (Bulgaria, Denmark, Estonia, Latvia, Romania, Finland and

Sweden excluded).

4.2. Investment in transport infrastructure

The level of investment in transport infrastructure and maintenance is difficult

to compare between EU countries due to non-harmonised and incomplete reporting.

Besides, it has to be matched with the actual investments needs. The latest OECD data

(2015) indicate that investment levels in

most countries remain at low levels. Most EU countries have a share of total transport

infrastructure investment below 1% of GDP55. It is a safe assumption that this does

not cover the investment needs (also due to the maintenance requirements) in most

countries.

The Connecting Europe Facility, the

European Fund for Strategic Invest-ments and cohesion policy (through the

Cohesion Fund and the European Regional Development Fund) intend to

address these budgetary deficiencies. They help in constructing the TEN-T core transport

network and support infrastructure projects

of high economic importance and relevance for the internal market. However, EU

countries will still need to develop infra-structure for the last leg of the network

which is critical for the incorporation of large infrastructure projects in the local transport

systems.

The length of the trans-European core

road network completed at the end of every year, compared to the total, including

planned sections and sections to be upgraded, can give a rough indication of the

progress of trans-European transport network policies in the EU countries. While

for some countries the investments have

already been completed (Spain, Portugal, Slovenia, the United Kingdom), others still

have a lot to do. This concerns mainly Central and Eastern European countries, and

55 OECD 2017.

https://stats.oecd.org/Index.aspx?DataSetCode=ITF_INV-MTN_DATA.

in particular Estonia, Lithuania, Poland,

Slovakia and Romania56.

The latest national reports57 (August 2014) demonstrate the strong and constant

involvement of most EU countries in intelligent traffic management and infor-

mation systems. These allow for a better

use of the infrastructure, in particular through better use of road, traffic and travel data and

the development of new intelligent transport services for traffic and freight management.

In addition, new open data strategies for transport (e.g. in the United Kingdom) or

the use of crowd-sourcing (e.g. travel-time information in Finland) have led to significant

changes and the development of new

services.

The national reports also highlight a growing trend towards more and more cooperative

intelligent transport systems and driver-less piloting activities in EU countries (e.g.

France, Germany, the Netherlands, Austria,

Finland, Sweden and the United Kingdom).

Although significant investments have been made into intelligent road transport systems,

monitoring and evaluating their impact in the EU countries continue to be fragmented.

Pan-European consolidation is insufficient.

4.3. Promoting shift to low-emission

mobility and addressing negative externalities

EU countries offer various incentives to promote the deployment of electric

vehicles, such as purchase subsidies, registration tax benefits, ownership tax

benefits, company tax benefits, VAT benefits and other financial benefits, local incentives

and infrastructure incentives. In most countries there is a clear relationship

between the incentives offered and an

increase in the number of plug-in electric vehicles. Unsurprisingly, in countries where

there are no incentives available i.e. Bulgaria, Estonia, Poland and Slovakia, there

is a low propensity to buy electric cars58.

56 TENtec 2013. http://ec.europa.eu/transport/infrastructure/ tentec/tentec-portal/site/index_en.htm. 57 http://ec.europa.eu/transport/themes/its/ road/action_plan/its_national_reports_en.htm. 58 European Alternative Fuels Observatory 2017.

http://www.eafo.eu/eu#eu_incentives_over_table_anchor.

Page 19 |

The introduction of schemes to internalise

the external cost of transport, implying a broader application of the 'polluter pays'

principle, needs to be promoted and encouraged in all EU countries. The

Commission has launched a comprehensive study 'Sustainable transport infrastructure

charging and internalisation of transport externalities', which will assess infrastructure

charges, other internalisation measures as

well as infrastructure-related expenditure. In addition, EU countries should be encouraged

to use the possibility offered by Directive 2011/76/EU59 to collect external-cost

charges from heavy goods vehicles on top of the infrastructure charges.

With the exception of a few front running countries, the uptake of alternative fuels for

all transport modes needs to be improved, in a harmonised and synchronised way. The

aim is to avoid technological islands, push for economies of scale and ensure cross-

border mobility. An ambitious implemen-tation of Directive 2014/94/EU60 would be a

way to deploy an alternative fuels

infrastructure with common standards.

Road charging on European roads is not systematically or effectively applied. 14 EU

countries apply distance-based charges (tolls) to heavy goods vehicles and 8 to

private cars on (some) motorways61. Other

EU countries still use time-based vignettes. 10 EU countries have vignettes for heavy

goods vehicles and 7 for cars, for the latter essentially applied on motorways only. In

addition, the systems vary in terms of network coverage, charge levels and other

conditions. This provides unclear and uncoordinated incentives to users. With very

few exceptions tolls are levied electronically.

Yet the systems are not mutually interoperable. All these differences create

administrative burden and unnecessary costs for hauliers and tourists.

59 Directive 2011/76/EU of the European Parliament and of the Council of 27 September

2011 amending Directive 1999/62/EC on the

charging of heavy goods vehicles for the use of certain infrastructures, OJ L 269, 14.10.2011. 60 Directive 2014/94/EU of the European Parliament and of the Council of 22 October 2014

on the deployment of alternative fuels infrastructure, OJ L 307, 28.10.2014. 61 Most EU countries have at least one or two

pieces of special infrastructure, such as bridges or tunnels, which are tolled.

Systems do not necessarily take account of

the environmental impact of vehicles. Tolling schemes which apply to heavy goods

vehicles differentiate charges according to the air pollutant emissions of the vehicles,

but the same is not true for road charges applying to passenger cars.

EU countries could and should make better use of the possibility to support the shift of

freight transport from road to more sustainable transport modes, as offered by

the Combined Transport Directive62. Considering its fragmented and uneven

implementation in EU countries, the Commission has proposed an amendment to

the Directive on 8 November 2017.

Despite the comparatively good provision of

infrastructure in the Benelux countries, Germany, Malta and the United Kingdom,

these countries suffer from a high level of road congestion. They must deal with high

and increasing costs for the

maintenance of their extensive transport infrastructure. This calls for a more

balanced exploitation of all transport modes. This can be achieved through better

and more flexible technologies and service solutions (especially the deployment of

intelligent transport systems) and appro-priate pricing for the use of infrastructure.

All EU countries need to continue their efforts to improve road safety. The poor

safety record in Bulgaria, Latvia, Lithuania, Poland and Romania calls for more effective

measures to be urgently implemented.

62 Council Directive 92/106/EEC of 7 December 1992 on the establishment of common rules for

certain types of combined transport of goods between Member States, OJ L 368, 17.12.1992.

Page 20 |

Figure 10: Transport environmental taxes as% of total taxation (2015)

SOURCE: DG TAXUD

Transport fuel taxes can encourage fuel efficiency and a more sustainable use of cars,

including the use of more sustainable fuels. The structure of such duties needs to reflect

both the carbon and energy content of fuels.

Currently, substantial differences in tax rates on fuels can be observed across EU countries.

There is a general preferential treatment of diesel. Diesel is taxed less than petrol in

almost all EU countries.

Transport taxation may have a significant

effect on consumers' preferences when purchasing a car. This includes registration

tax (levied on the purchase of a car) and vehicle road tax (levied annually on car

ownership). Registration of a car is subject to a tax in 20 EU countries, and 22 apply vehicle

road taxes63.

Registration taxes are currently dependent

on CO2 emissions in 15 EU countries. 12 countries take emissions into account in the

rate of circulation taxes payable on different vehicles64. Bulgaria, the Czech Republic,

Estonia, Lithuania, Poland and Slovakia are among the countries where vehicle taxation

based on CO2 emissions would be welcome.

However, neither registration taxes nor road

taxes affect the marginal cost of using a

63 ACEA Tax Guide 2016. 64 European Commission, Tax Reforms in EU

Member States 2015, Institutional Paper 008 | September 2015.

vehicle. Moreover, the absence of harmoni-sation of registration taxes at EU level can

create a significant administrative burden and sometimes double taxation when vehicles are

transferred to another country65.

The share of environmental taxes in total

transport taxation can indicate only to some extent how the taxation system

addresses transport externalities. There are other factors affecting the decision how to tax

transport/vehicles and it is more the design of

the system than the absolute tax levels that have a greater influence on the behaviour of

motorists.

Favourable tax treatment of company cars is a practice that needs to be considered

when looking at the internalisation of environ-

mental costs. Several EU countries subsidise the private use of company cars.

Belgium, Ireland, Estonia, and Latvia allow a

partial deduction of the VAT charged on the purchase of company cars intended for

private use by employees. Advantageous

company car schemes tend to encourage car ownership and often affect the choice of

model and driving habits. Recent Commission proposals are seeking to address these

problems66.

Date: 14.11.2017

65 Ibid. 66 COM(2017) 275, COM(2017) 276.

Page 21 |

STATISTICAL ANNEX

Table 1 – Access to market and market performance

Country

OECD regulatory

restriction indicators

Access to rail market - market share of all

but the principal undertakings

Labour productivity of

the transport sector in 1000

EUR (2015)

Performance of the passengers

transport markets - Market Performance Indicator

Road freight: share of

home-based vehicles in tonne-km from

Air

(2013)

Road

(2013)

Rail

(2013)

Freight

(2015)

Passengers

(2015)

Train

services (2015)

Airline

services (2015)

Local public

transport (2015)

Exporting

to EU28 (2016)

Importing

from EU28 (2016)

Belgium 0.1 2.3 3.8 25.1% 3.3% 79.4* 70.8 81.3 72.2 15.7% 13.1%

Bulgaria 0.0 3.0 3.8 51.4% 0.0% 13.9 62.6 82.7 74.3 91.0% 88.9%

Czech Republic 2.9 2.3 2.3 33.5% 5.0% 27.5 81.7 83.4 82.0 55.3% 49.9%

Denmark 0.4 1.5 2.3 29.0% 7.0% 88.8 76.8 82.3 76.9 16.3% 7.7%

Germany 0.0 1.5 2.3 40.9% 13.5% 48.0 84.4 85.3 84.6 19.0% 14.1%

Estonia 2.9 2.3 2.6 29.0% 0.0% 31.1 84.7 81.4 83.3 64.4% 45.6%

Ireland 0.8 1.5 4.9 0.0% 0.0% 105.6 78.4 82.1 77.0 65.2% 42.6%

Greece 0.0 3.3 4.5 0.0% 0.0% 45.2 76.2 82.1 78.5 44.3% 34.8%

Spain 0.0 2.3 4.0 26.0% 0.0% 66.4 74.3 76.9 75.1 60.7% 55.0%

France 0.5 4.0 3.8 25.6% 5.0% 67.6 83.7 85.0 83.2 9.2% 7.5%

Croatia 4.0 1.5 5.3 2.0% 0.0% 27.7 63.8 80.9 73.5 87.7% 64.8%

Italy 0.0 4.3 2.8 41.2% 23.0% 59.8 68.5 81.1 66.6 12.6% 11.5%

Cyprus 2.1 1.5 45.3 82.6 77.0

Latvia 3.0 1.5 2.6 31.1% 8.3% 20.7 79.1 81.1 76.7 62.3% 56.1%

Lithuania 1.5 1.5 2.6 0.0% 0.0% 18.9 89.6 82.8 82.8 68.6% 57.4%

Luxembourg 1.5 1.5 5.4 0.0% 0.0% 82.0 85.9 86.2 86.0 50.9% 46.4%

Hungary 0.0 2.0 3.1 39.6% 3.5% 22.0 78.9 88.4 81.6 61.8% 56.2%

Malta 2.9 1.5 57.0 87.4 70.7

Netherlands 0.2 2.3 3.1 14.9% 81.8 73.8 80.6 76.0 37.0% 32.0%

Austria 0.0 1.5 2.6 0.0% 12.2% 74.7 85.2 85.9 86.3 19.8% 17.6%

Poland 2.8 2.3 2.8 38.1% 51.7% 23.4 71.3 82.2 78.7 93.5% 93.1%

Portugal 3.0 2.3 3.9 11.8% 5.4% 43.3 76.6 80.3 76.1 76.9% 63.7%

Romania 2.9 3.0 2.3 60.2% 13.5 68.2 85.9 76.8 84.0% 69.1%

Slovenia 3.6 2.3 3.8 12.1% 0.0% 45.3 80.1 85.0 82.6 70.3% 65.0%

Slovakia 0.0 1.5 3.1 17.6% 6.0% 30.9 79.4 81.9 80.1 64.1% 60.8%

Finland 1.7 1.5 4.4 0.0% 0.0% 60.8 80.3 83.2 83.7 43.5% 32.8%

Sweden 0.6 1.5 3.0 48.0% 33.5% 66.5 70.9 82.4 75.4 8.4% 8.4%

United Kingdom 0.0 1.5 0.3 52.6% 83.4 72.5 81.1 77.1 16.5% 10.4%

NOTE: TOP FIVE SCORES IN GREEN, BOTTOM FIVE SCORES IN RED, WHERE RELEVANT TO PROVIDE RANKING. IN THE CASE OF THE INDICATORS OF MARKET SHARE ON NON-INCUMBENTS, PERFORMANCES UNDER

3% ARE HIGHLIGHTED. IF NOT OTHERWISE SPECIFIED, DATA ARE DERIVED FROM EUROPEAN COMMISSION SOURCES. (*2014)

Page 22 |

Table 2 – Infrastructure

Country

World Bank Logistic

Performance Index

(2016)

World Economic Forum Quality of

Infrastructure Index (2016-2017)

Density of motorway

network (km)

Density of rail network

(km) Km of

high

speed

rail

lines

(2016)

Total inland

transport

infrastructure

investment -

share of GDP

(2015)

Global

LPI

Infrastructure

component Roads Railroad Seaports

Air

transport

per

1 000

km2

(2015)

per 1 000

inhabitants

(2015)

per

1 000 km2

(2015)

per 1 000

inhabitants

(2015) Belgium 4.1 4.1 4.5 4.8 6.1 5.7 57.8 157.4 118.2 320.4 209 0.5%

Bulgaria 2.8 2.4 3.4 3.0 4.1 4.3 6.6 101.3 36.2 558.0 1.2%

Czech Republic 3.7 3.4 4.0 4.4 3.5 5.3 9.8 73.8 120.0 898.2 1.2%

Denmark 3.8 3.8 5.5 4.6 5.7 6.1 28.7 220.2 59.2 450.9

0.9%

Germany 4.2 4.4 5.5 5.5 5.5 5.8 36.4 160.9 108.7 478.3 1 475 0.6%

Estonia 3.4 3.2 4.7 4.1 5.6 5.1 3.3 111.7 33.4 1 149.8 1.5% 1

Ireland 3.8 3.8 4.6 3.7 5.1 5.4 13.0 198.9 26.9 409.4 0.2%

Greece 3.2 3.3 4.5 2.8 4.5 4.8 12.0 145.5 17.0 207.1 1.3% 2

Spain 3.7 3.7 5.5 5.5 5.5 5.8 30.3 329.7 31.7 345.7 2 938 0.6%

France 3.9 4.0 6.0 5.8 5.1 5.7 18.3 176.2 45.4 433.5 2 142 0.8%

Croatia 3.2 3.0 5.5 2.8 4.6 4.2 23.1 308.5 46.0 616.3 1.4% 2

Italy 3.8 3.8 4.5 4.1 4.4 4.6 23.0 114.2 56.6 280.3 981 0.6% 3

Cyprus 3.0 3.0 5.1

4.6 5.5 29.4 317.0

Latvia 3.3 3.2 3.0 4.2 5.1 5.2 28.8 936.0 1.7%

Lithuania 3.6 3.6 4.7 4.4 4.8 4.4 4.7 105.0 28.7 642.5 1.2%

Luxembourg 4.2 4.2 5.5 4.9 4.6 5.6 62.3 292.9 106.3 488.5 1.0%

Hungary 3.4 3.5 4.1 3.6 3.2 4.1 20.3 190.7 84.9 801.5 1.8%

Malta 3.1 2.9 3.2

5.3 5.7 0.5% 3

Netherlands 4.2 4.3 6.1 5.8 6.8 6.6 66.4 163.8 73.6 180.9 120 0.6% 1

Austria 4.1 4.1 6.0 5.3 3.9 5.2 20.5 202.1 58.9 575.1 48 0.6%

Poland 3.4 3.2 4.1 3.6 4.2 4.5 5.0 41.0 59.2 487.0 224 0.4% 3

Portugal 3.4 3.1 6.0 4.2 5.2 5.5 33.3 293.9 27.6 245.3 0.2% 2

Romania 3.0 2.9 2.7 2.6 3.5 4.0 3.1 37.4 45.2 542.3 2.1% 3

Slovenia 3.2 3.2 4.4 2.9 5.0 4.3 38.1 375.0 59.6 586.1 1.2%

Slovakia 3.3 3.2 4.0 4.4 3.0 3.5 9.4 85.5 73.9 668.8 2.3%

Finland 3.9 4.0 5.4 5.6 6.2 6.3 2.6 161.6 17.5 1 082.5 1.6%

Sweden 4.2 4.3 5.5 4.6 5.5 5.8 4.7 219.7 24.2 1 119.1 5.2%

United Kingdom 4.1 4.2 5.1 4.7 5.5 5.5 15.5 58.6 66.5 250.3 113 0.1%

1 2011;

2 2013;

3 2014

NOTE: TOP FIVE SCORES IN GREEN, BOTTOM FIVE SCORES IN RED, WHERE RELEVANT TO PROVIDE RANKING. IF NOT OTHERWISE SPECIFIED, DATA ARE DERIVED FROM EUROPEAN COMMISSION SOURCES.

Page 23 |

Table 3 – Environmental and social dimension

Country

Hours

spent in

road

congestion

annually

(2015)

Share of

renewable

energy

sources in

transport

(2015)

CO2 emissions from new

registered vehicles

(g/km) (2015)

Share of

electrified

railway

lines over

total lines

in use

(2015)

Road

fatalities

per million

inhabitants

(2016)

Environmental taxes on

transport (fuel and

other taxes)

(2015)

Plug-in

electric

vehicle share

in new

registrations

of passenger

cars (2016)

Charging points

per 100 000

inhabitants in

(peri-)urban

areas (2017) Passenger

cars

Light-

duty

vehicles

as% of

GDP

as% of total

taxation

Belgium 36.1 3.8% 117.9 175.7 85.6% 56 1.8% 4.1% 1.7% 27.5

Bulgaria 30.4 6.5% 130.3 143.9 71.1% 99 2.7% 9.4% 0.1% 1.7

Czech Republic 23.4 6.5% 126.3 143.2 34.0% 58 1.8% 5.4% 0.1% 21.2

Denmark 22.9 6.7% 106.2 149.8 24.3% 37 2.4% 5.2% 0.6% 199.6

Germany 29.6 6.8% 128.4 182.6 52.4% 39 1.5% 3.9% 0.7% 57.8

Estonia 20.6 0.4% 137.2 165.0 8.7% 54 2.1% 6.3% 0.3% 67.3

Ireland 32.2 6.5% 114.3 168.5 2.7% 39 1.5% 6.4% 0.5% 77.1

Greece 38.8 1.4% 106.4 186.4 23.4% 75 2.6% 7.2% 0.1% 0.7

Spain 26.6 1.7% 115.3 154.4 63.6% 39 1.4% 4.0% 0.3% 6.1

France 29.3 8.5% 111.0 154.4 55.5% 54 1.4% 3.1% 1.5% 71.8

Croatia 26.0 3.5% 112.9 156.0 37.3% 73 3.1% 8.3% 0.2% 29.3

Italy 35.4 6.4% 115.4 153.2 71.2% 54 2.1% 5.0% 0.2% 7.7

Cyprus 2.5% 125.8 154.2 54 2.7% 8.3% 0.3% 4.3

Latvia 21.8 3.9% 137.1 172.6 13.4% 80 2.3% 7.8% 0.3% 7.1

Lithuania 21.5 4.6% 130.0 165.1 6.5% 65 1.7% 5.9% 0.4% 3.2

Luxembourg 32.2 6.5% 127.5 168.9 95.3% 56 1.8% 4.8% 0.6% 37.7

Hungary 27.3 6.2% 129.6 176.9 39.0% 62 2.2% 5.6% 0.3% 12.1

Malta 76.0 4.7% 112.9 148.9 51 2.5% 7.4% 0.1% 22.6

Netherlands 30.2 5.3% 101.2 163.2 75.7% 32 2.1% 5.6% 6.0% 240.1

Austria 27.1 11.4% 123.7 178.3 71.2% 50 2.1% 4.7% 1.5% 111.4

Poland 25.4 6.4% 129.3 175.2 63.6% 80 2.2% 6.7% 0.1% 3.4

Portugal 27.7 7.4% 105.7 141.7 64.4% 54 2.2% 6.5% 0.9% 26.8

Romania 32.1 5.5% 125.0 170.3 37.4% 97 1.9% 6.9% 0.2% 4.2

Slovenia 26.9 2.2% 119.2 186.6 41.4% 63 3.0% 8.2% 0.4% 56.7

Slovakia 22.9 8.5% 127.7 174.1 43.8% 50 1.6% 5.1% 0.1% 70.7

Finland 19.9 22.0% 123.0 174.7 55.1% 45 2.1% 4.8% 1.2% 57.9

Sweden 21.5 24.0% 126.3 163.0 75.5% 27 1.4% 3.3% 3.6% 75.1

United Kingdom 41.5 4.4% 121.3 178.0 33.2% 28 2.0% 5.9% 1.5% 27.1

NOTE: TOP FIVE SCORES IN GREEN, BOTTOM FIVE SCORES IN RED, WHERE RELEVANT TO PROVIDE RANKING. IF NOT OTHERWISE SPECIFIED, DATA ARE DERIVED FROM EUROPEAN COMMISSION SOURCES.

Page 24 |

Indicators presented in the tables

Table 1 – Access to market and market performance

OECD regulatory restriction indicators: The selected indicators are the OECD indicators of regulation in energy, transport and communications (ETCR). They

summarise regulatory provisions in air passenger transport and road freight

transport (2013). The index scale ranges from 0 – least restrictive to 6 – most restrictive. The data are collected every 5 years.

Market share of all but the principal undertakings: The total market share of all

but the principal railway undertakings, for both freight and passenger transport (2015, source: European Commission - DG MOVE) can be considered an indicator of

the level of competition in the rail sector. Not applicable to Cyprus and Malta.

Labour productivity: Apparent labour productivity – gross value added per person

employed in the transportation and storage sector (NACE rev. 2 section H) (data for 2015; source: Eurostat).

Performance of the passenger transport markets: The selected indicator is the 'market performance indicator' (MPI). It indicates a country's rank among the other

countries for a specific market in 2015, as perceived by users, related to train, airline and the local public transport services. MPI is a composite index reflecting five

main aspects of consumer experience: (1) the ease of comparing offers, (2) consumer trust in retailers/providers to comply with consumer protection rules, (3)

the experience of problems and the degree of detriment suffered, (4) overall consumer satisfaction and (5) choice of offers available (Source: European

Commission).

Share of home-based vehicles in tonne-km generated in exports to and

imports from other EU28 countries: This indicator measures the relative competitiveness of a country's road haulage sector in the EU via the share of

vehicles registered in the reporting country in total tonne-km generated when goods were exported from or imported to that country by road to/from another EU country

(2016, source: Eurostat).

Table 2 – Infrastructure

Logistics performance index: The selected indicator is the World Bank's logistics performance index (World Bank, 2016). LPI ranks countries on six dimensions of

trade - including customs performance, infrastructure quality, and timeliness of shipments. The data used in the ranking comes from a survey of logistics

professionals. They are asked questions about the foreign countries in which they

operate.

Quality of infrastructure: The selected indicators are the indices of satisfaction with respect to road, rail, seaports (for landlocked countries' accessibility to seaport

facilities) and air transport infrastructure quality. They are part of the World Economic Forum Global Competitiveness Report 2017-2018 (1 = extremely

underdeveloped/ among the worst in the world; 7 = extensive and efficient/ among

the best in the world; weighted average; period covered 2016-2017). Based on the Executive Opinion Survey.

Density of the motorway network: Per 1000 km² of territory and per 1000

inhabitants (2015, source: European Commission).

Density of the railway network: Per 1000 km² of territory and per 1000

inhabitants (2015, source: European Commission).

Page 25 |

Km of high-speed rail lines: For EU countries with high speed rail infrastructure,

the length of lines, but not a ranking, has been provided (2016, source: European Commission).

Total inland transport infrastructure investment: Investment and maintenance

spending on transport infrastructures (road, rail, sea ports and airports) as% of GDP (2015, source: OECD). It should be underlined that data for this indicator are not

completely harmonised. Different categories of investments and maintenance could

be included depending on the country. The coverage is partial for some countries. The data are collected on a voluntary basis. Furthermore, high values are not

necessarily associated with a positive performance and would have to be compared to the actual investment needs (e.g. in the case of 'catching-up' countries).

Table 3 – Environmental and social dimension

Congestion: Average annual hours spent in congestion per vehicle (2015, source:

JRC based on TomTom data).

Deployment of clean transport technologies: The selected indicators are the share of Renewable Energy Sources (RES) in transport (2015, source: Eurostat).

CO2 emissions from new passenger cars: Gram of CO2/km (2015, source: EEA).

CO2 emissions from new vans: Gram of CO2/km (2015, source: EEA).

Share of electrified railway lines over total lines in use: 2015, source:

European Commission.

Road safety: The number of road fatalities per million inhabitants (2016, source: European Commission – CARE database).

Transport taxation: Revenues from environmental taxes on transport (fuel and other taxes) as% of GDP and total taxation revenues (2015, source: European

Commission).

PEV market share in new passenger car registrations: Plug-in electric vehicles

(PHEV+BEV), M1 category of vehicles (2016, source: European Alternative Fuels Observatory).

Charging points per 100 000 inhabitants in (peri-)urban areas: Total number

of electric vehicle charging points divided by the population in urban areas and/or peri-urban areas. It is assumed that most of the charging points are installed in

urban areas. (2017, source: European Alternative Fuels Observatory).